Learn how prediction markets work

Beginners

What are prediction markets?

A prediction market is a platform where people buy and sell contracts based on the outcome of future events. The price of a contract reflects the collective belief about how likely that outcome is to happen — expressed as a percentage probability.

For example, a contract priced at 67¢ on "Will Bitcoin reach $150,000 before July 2026?" means the market collectively believes there is a 67% chance that event will occur. If it does, the contract pays out $1. If it doesn't, it pays nothing.

Unlike opinion polls or expert forecasts, prediction markets have real money (or in some cases, play money) behind them — which gives participants a strong incentive to think carefully and honestly about what they believe.

How do prediction markets work?

Most prediction markets use a binary yes/no contract structure. A market is created around a specific question with a defined resolution date — for example, "Will the Fed cut rates in June 2026?" On that date, the outcome is determined by an objective source (a news article, official data release, or other verifiable fact), and contracts pay out accordingly.

The mechanics

Traders buy "yes" shares if they think an event will happen, or "no" shares if they think it won't. The price of a yes share fluctuates between 0 and $1 (or 0¢ and 100¢) based on supply and demand. A price of 72¢ means the market implies a 72% probability.

How probabilities update

As new information emerges — a news story, a speech, a data release — traders update their positions. This pushes prices up or down, making prediction markets one of the fastest-moving indicators of how events are likely to unfold.

How to read prediction market probabilities

The probability shown on Full Prediction (e.g. "67%") is derived directly from the market price of the "yes" contract. It represents the collective best estimate of all active traders at that moment.

What the numbers mean

A probability above 85% means the market considers the event highly likely. Between 40–60% means genuine uncertainty — the market is roughly split. Below 15% means the market considers the event unlikely but not impossible.

Divergence between platforms

When Polymarket shows 67% and Kalshi shows 55% on the same event, that gap is meaningful. It may reflect different participant pools, different liquidity levels, or genuine information asymmetry between platforms. We flag these gaps on the dashboard as "probability divergence."

Prediction markets vs. sports betting

They can look similar on the surface — both involve taking positions on future outcomes — but they are fundamentally different in structure and purpose.

Platform guides

Polymarket

Polymarket is the world's largest prediction market by trading volume, operating on the Polygon blockchain using USDC as its currency. It was founded in 2020 and has grown rapidly, processing billions of dollars in volume during major events like US elections and the 2024 Olympics.

How it works

Users connect a crypto wallet (MetaMask or similar), deposit USDC, and trade event contracts. Markets are created by the platform and by the community. Outcomes are resolved by a decentralised oracle system called UMA.

Who it's for

Polymarket is best for users comfortable with crypto and interested in high-liquidity markets on major events. US residents are legally restricted from trading, though they can view data freely — which is what Full Prediction displays.

Kalshi

Kalshi is a US-regulated prediction market, operating under a CFTC (Commodity Futures Trading Commission) licence. Founded in 2018 and launched publicly in 2021, it is one of the first legally regulated event contract exchanges in the United States.

How it works

Users fund accounts in US dollars (no crypto required). Markets cover economics, politics, weather, sports and more. Contracts pay out $1 on a "yes" result and $0 on a "no" result. Settlement uses publicly verifiable sources.

Who it's for

Kalshi is the best option for US residents who want to participate in regulated prediction markets without crypto exposure. Its CFTC licence makes it the most legally straightforward platform for American users.

Manifold Markets

Manifold is a play-money prediction market — no real money is involved. Users receive free "mana" (the platform currency) to trade on thousands of markets created by the community. It's the most open and creative of the major platforms.

Why it matters

Despite using play money, Manifold markets often track real-money platforms closely. The volume of markets — covering niche topics real-money platforms won't touch — makes it an invaluable data source for researchers and curious readers who want breadth over financial stakes.

Who it's for

Anyone who wants to explore prediction markets without financial risk, or who wants to find markets on topics that real-money platforms don't cover.

Metaculus

Metaculus is a forecasting platform rather than a trading market. Users make probability estimates on questions — there's no buying or selling of contracts. Instead, Metaculus aggregates forecasts using a sophisticated algorithm that weights users by their track record of accuracy.

What makes it different

Metaculus specialises in long-horizon questions: AI timelines, scientific breakthroughs, geopolitical outcomes over years or decades. Its community skews towards researchers, academics and serious forecasters.

Who it's for

Researchers, journalists and analysts interested in long-range forecasting on science and technology questions. Its data is particularly valuable for understanding what serious forecasters believe about AI development, climate, and public health.

Compare all platforms

Going deeper

Are prediction markets legal?

The legal status of prediction markets varies significantly by country and by the type of market. Here is a straightforward overview.

United States

Kalshi is fully legal and CFTC-regulated, making it the safest option for US residents. Polymarket blocks US users from trading due to regulatory uncertainty around offshore crypto-based markets. Play-money platforms like Manifold and forecasting platforms like Metaculus are unrestricted.

Europe

EU regulations vary by member state. The EU's MiCA regulation (covering crypto assets) may affect crypto-based prediction markets like Polymarket for EU users as it comes into enforcement in 2026.

Prediction markets for research and journalism

One of the most important use cases for prediction market data — and the core purpose of Full Prediction — is as a research and information tool, not a trading venue.

For journalists

Prediction market probabilities give reporters a real-time, quantified measure of what the informed public believes about a developing story. Instead of quoting "analysts expect…", a journalist can write "markets currently price a 71% chance that…" — a more precise and falsifiable claim.

For researchers

Metaculus and Manifold provide rich datasets on long-horizon questions. Academics studying forecasting, epistemics and collective intelligence use these platforms as primary data sources. Polymarket and Kalshi provide high-frequency price data useful for studying information markets.

For curious readers

Prediction markets offer a unique window into collective belief — what thousands of people, betting real money, actually think will happen. That's often more informative than any single expert opinion or poll.

A brief history of prediction markets

The idea of using markets to aggregate forecasts is not new. The Iowa Electronic Markets, launched in 1988 by the University of Iowa, were among the first academic prediction markets — allowing participants to trade on US presidential election outcomes. They proved surprisingly accurate, often outperforming professional pollsters.

Intrade, an Irish platform active from 2001 to 2013, brought prediction markets to a mainstream audience before closing following regulatory pressure from US authorities. The 2013 closure left a gap that modern platforms have since filled.

Augur (2018) was the first major decentralised prediction market, built on Ethereum. Its successor, Polymarket, launched in 2020 and grew rapidly — particularly during the 2024 US presidential election, which generated over $3.5 billion in trading volume on a single question.

Kalshi received its CFTC licence in 2020 after a landmark legal battle, establishing for the first time that event contracts on political and economic events were legal in the United States under federal commodities law.

Frequently asked questions